Lansner: Can housing boom without economic oomph?

Yes, residential real estate's gyrations may often be self inflicted – driven, say, by mispricngs or overbuilding or under development or with wildly varying loan qualification terms. But do not forget that housing values are heavily tied to the performance of the wider business climate.

To check my thesis, I tossed some state-by-state economic data into my trusty spreadsheet – housing and general economic patterns plus a few business rankings. What I found might be obvious, but it’s also worth noting: a keen link between the states where home prices have rebounded strongest from the Great Recession’s pain and the quality of those state's overall economic health.

In this analysis, I ranked states by their five-year home price gains through the first quarter, as measured by the Federal Housing Finance Agency. I then grouped the states by best performing (top third in gains, with a median 8.7 percent appreciation in 2009-14) and the worst performing (bottom third, median loss of 4.6 percent in five years). The best and the worst were then collectively compared against a collection of key economic measures.

The first metric I pondered was jobs. Forget housing supply or days on market or mortgage rates – you cannot seriously talk about the housing market with considering employment trends.

Looking at April data from the Bureau of Labor Statistics, I found that top-performing states, price-wise, were places with lower unemployment rates – a 5.2 percent median vs. 6.1 percent in home-price-weak states. And job growth? A median annual job gain of 1.6 percent where appreciation was highest, vs. 1.3 percent at home pricing's bottom end.

Next, I spied a broader growth measure: the government's state gross domestic product. Using growth rates from 2009 through 2012, latest figures available, I discovered the top-performing home markets were in faster-expanding state economies: a median 6.2 percent three-year growth vs. 5.3 percent for the weaker housing areas.

Scoring state business climates has become a popular art. But is it relevant for housing?

I looked at two measures of business environments, an empirical analysis by state from CNBC and an executive popularity poll on where to best do business from CEO Magazine.

But should the view from the corner offices drive housing? What about consumer attitudes?

Every year, pollsters at Gallup ask people nationwide 1) if you could, would you leave your state, and 2) do you have actual plans to depart.

The top performing states had more people inclined to stay: a median of 31 percent told Gallup they’d consider leaving vs. 35 percent for the poorly performing housing markets. The same trend held for people exiting: In top performing states, only 12 percent have plan to move out vs. 15 percent where prices are weaker.

Now we often hear that taxes are driving certain household’s decisions about where to live. Could that show up in home values?

By my math, higher home price gains were found in tax-friendly states, as ranked by the Tax Foundation (median rank of 19 vs. 37).

Curiously, the same isn’t true about another supposedly key housing factor: Education quality.

Using Education Week's annual K-12 school quality rankings, I found a higher price-gain states had a median education rank of 34th in higher-gain states vs. 22nd where pricing's weakest.

(And for those of you wondering how politics plays with home prices, I compared the best- and worst-performing home-price states with 2012 Presidential election results. Home appreciation ran highest in states where President Obama stumbled, and poorly in states where he won handily.)

Overall, my thesis held up – high housing appreciation is tied to strong economic growth – with one major outlier:

California.

If the a top-flight business environment is so critical to housing, explain the state’s housing performance.

Only modest job and economic growth. A poorly ranked business and taxing climate. Residents have an average desire to leave.

Yet California has the nation’s second-largest home price gain – up 27 percent in the past five years!

Perhaps the much-discussed real estate intangibles do have a say in the results – such as location, location, location.

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